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FINAL REGULATORY IMPACT ASSESSMENT
AND REGULATORY FLEXIBILITY ANALYSIS


Final Rule: 30 CFR Part 100
RIN 1219-AA49
Criteria and Procedures for the Assessment of Civil Penalties

Mine Safety and Health Administration

March 4, 1998

COST OF COMPLIANCE

SUMMARY

The following table summarizes by provision the net annual costs of the Mine Safety and Health Act and the Federal Civil Penalties Inflation Adjustment Act (as amended), as implemented by this rule.

TABLE IV-1: Summary of Net Compliance Costs of the Rule to Mines

SECTION TOTAL COST M/NM COST COAL COST
100.3 Regular Assessment $1,137,064 $235,894 $901,170
100.4 Single Assessment $328,063 $141,940 $186,123
100.5 Special Assessment $1,109,309 $304,186 $805,123
TOTAL $2,574,436 $682,020 $1,892,416

In addition to these costs, there will be additional costs related to smoking violations by miners. MSHA estimates that the average annual cost of these violations would increase by $425 to $4,675 annually from $4,250.

SECTION-BY-SECTION DISCUSSION

Section 100.3 Determination of penalty amount; regular assessment.

This section provides that a penalty assessment, ranging from $66 to a maximum of $55,000, may be imposed on a mine operator. This penalty amount is based on a formula which considers the size of the business, violation history, negligence of the operator, the gravity of the violation and the operator's good faith effort to achieve compliance. The effect of the penalty on the operator's ability to continue in business is considered if the issue is raised by the operator in a timely manner.

U.S. mine operators were assessed over three years an average of $11,370,636 for regularly assessed penalties. MSHA anticipates this amount to increase by $1,137,064 to $12,507,700. The coal mine industry is assessed an average of $9,011,697 annually on regular assessment penalties. With the final rule, this average would increase by $901,170 to $9,912,867. For the metal/nonmetal mine industry, the average annual increase would be $235,894, resulting in annual civil penalties of approximately $2,594,833. These figures are based on averaged penalty data for CY 1994-1996 and a ten percent penalty increase for future years. The calculations are as follows.

Regular Assessment Penalties
(coal)
1994
1995
1996
$10,238,003
$9,325,185
$7,471,904
Average Annual Penalty Amount $9,011,697 = ($10,238,003 + $9,325,185 +
$7,471,904) divided by 3 years
Average Future Annual Regular
Assessment Penalties (coal)
$9,011,697 * 1.1 = $9,912,867 (average
annual penalty increased by ten percent)
Average Annual Increase $901,170 = $9,912,867 - $9,011,697 (new
annual average minus old annual average)

Regular Assessment Penalties
(metal/nonmetal)
1994
1995
1996
$2,586,184
$2,357,251
$2,133,383
Average Annual Penalty Amount $2,358,939 = ($2,586,184 + $2,357,251 +
$2,133,383) divided by 3 years
Average Future Annual Regular
Assessment Penalties
(metal/nonmetal)
$2,358,939 * 1.1 = $2,594,833 (average
annual penalty increased by ten percent)
Average Annual Increase $235,894 = $2,594,833 - $2,358,939 (new
annual average minus former annual average)

Section 100.4 Determination of penalty; single penalty assessment.

This section provides that a penalty assessment of $55 may be imposed on a mine operator. This penalty amount is attributed to violations which are not reasonably likely to result in a reasonably serious injury or illness and are abated within the time frame determined by the inspector.

In situations where the violation is not abated within the time frame designated by the inspector, the violation will be processed as either a regular assessment or a special assessment. Single penalty violations at mines with an excessive history of violations will be processed as regular assessments.

The coal mine industry is assessed an average of $1,863,130 annually in single penalty assessments. With the final rule, this average would increase by $186,313 to $2,049,443. The metal/nonmetal mine industry would be assessed an additional $141,940, bringing the annual single penalty assessments to approximately $1,561,340. These figures are based on averaged penalty data for CY 1994-1996 and a ten percent penalty increase for future years. The calculations are as follows.

Single Assessment Penalties
(coal)
1994
1995
1996
$1,829,570
$1,812,070
$1,947,750
Average Annual Penalty Amount $1,863,130 = ($1,829,570 + $1,812,070 +
$1,947,750) divided by 3 years
Average Future Annual Single
Assessment Penalties (coal)
$1,863,130 * 1.1 = $2,049,443 (average
annual penalty increased by ten percent)
Average Annual Increase $186,313 = $2,049,443 - $1,863,130 (new
annual average minus former annual
average)

Single Assessment Penalties
(metal/nonmetal)
1994
1995
1996
$1,580,250
$1,403,800
$1,274,150
Average Annual Penalty Amount $1,419,400 = ($1,580,250 + $1,403,800 +
$1,274,150) divided by 3 years
Average Future Annual Single
Assessment Penalties
(metal/nonmetal)
$1,419,400 * 1.1 = $1,561,340 (average
annual penalty increased by ten percent)
Average Annual Increase $141,940 = $1,561,340 - $1,419,400 (new
annual average less former annual
average)

Section 100.5 Determination of penalty; special assessment.

This section pertains to violations which are of such a nature or seriousness that MSHA cannot determine an appropriate penalty using the regular assessment formula or the single assessment provision. This section also addresses penalties which may be assessed to an operator for failure to correct a violation within the period required. Finally, this section addresses penalties which may be assessed for miners who willfully use or carry smoking materials underground.

The special assessment penalty is determined by experienced Agency mine safety and health specialists, based on the facts and circumstances of each case. Prior to a special assessment, Agency field personnel review certain categories of violations for special assessment.

Because of these factors, the Agency cannot precisely determine an economic assessment of the impact of the proposed special assessments. However, MSHA has used its experience, over a three year time period, to develop an estimate of what might be expected for special assessments.

It is important to underscore that because these assessments are individually assessed, on a case-by-case basis, the computations contained in this portion of the regulatory impact analysis are only representative estimates.

Based upon MSHA's experience, the coal mine industry is assessed an average of $8,051,234 annually in special assessment penalties. Under the final rule, the average annual amount spent is expected to be $8,856,357, an increase of $805,123. Approximately $304,186 more would be assessed to metal/nonmetal mines for special assessments annually for a total of $3,346,054. These figures are based on averaged penalty data for CY 94-96 and a ten percent penalty increase for future years. The calculations are as follows.

Special Assessment Penalties
(coal)
1994
1995
1996
$13,853,400
$7,228,601
$3,071,700
Average Annual Penalty Amount $8,051,234 = ($13,853,400 + $7,228,601
+ $3,071,700) divided by 3 years
Average Future Annual Special
Assessment Penalties (coal)
$8,051,234 * 1.1 = $8,856,357 (average
annual penalty increased by ten
percent)
Average Annual Increase $805,123 = $8,856,357 - $8,051,234 (new
annual average minus former annual
average)

Special Assessment Penalties
(metal/nonmetal)
1994
1995
1996
$4,889,600
$2,912,350
$1,323,654
Average Annual Penalty Amount $3,041,868 = ($4,889,600 + $2,912,350 +
$1,323,654) divided by 3 years
Average Future Annual Special
Assessment Penalties
(metal/nonmetal)
$3,041,868 * 1.1 = $3,346,054 (average
annual penalty increased by ten percent)
Average Annual Increase $304,186 = $3,346,054 - $3,041,868 (new
annual average minus former annual
average)

Smoking Citations

This section pertains to smoking violations by miners. Currently, miners may be assessed a maximum of $250 for each occurrence if they are found using or carrying smoking materials underground. The final rule would increase the maximum assessment to $275.

An average of $4,250 annually is assessed against miners for smoking violations. Under the final rule, the average annual assessment amount is expected to be approximately $4,675, an increase of $425. These figures are based on averaged penalty data for CY 1994 through 1996 and a ten percent penalty increase for future years. The calculations are as follows.

Smoking Penalties
1994
1995
1996
$9,750
$500
$2,500
Average Annual Penalty Amount
$4,250 = ($9,750 + $500 + $2,500 divided by 3 years
Average Future Annual Special
Assessment Penalties (coal)
1.1 * $4,250 = $4,675 (average annual
penalty increased by ten percent)
Average Annual Increase $425 = $4,675 - $4,250 (new annual
average minus former annual average)

REGULATORY FLEXIBILITY CERTIFICATION

In accordance with § 605 of the Regulatory Flexibility Act (RFA), the Mine Safety and Health Administration certifies that the proposed rule does not have a significant economic impact on a substantial number of small entities. This proposed regulation does no more than to codify existing law and to mechanically increase certain civil money penalties to account for inflation, pursuant to specific directions set forth in the Federal Civil Penalties Inflation Adjustment Act, as amended. The statute specifies the procedure for calculating the adjusted civil penalties and does not allow the Department to vary the calculation to minimize the effect on small entities. Moreover, the actual amount of the increase in penalties would not meet the threshold set forth in the Regulatory Flexibility Act.

MSHA considers small mines to be mines with fewer than 20 employees. However, for the purposes of the RFA and this certification, MSHA has also evaluated the impact of the final rule on all mines including those with fewer than 500 employees. About 350 small governmental jurisdictions may be affected. Under the Small Business Regulatory Enforcement Fairness Act (SBREFA) amendments to the RFA, MSHA must include in the final rule a factual basis for this certification. The Agency is publishing the regulatory flexibility certification statement in the Federal Register, along with the factual basis. The Agency has provided the Small Business Administration (SBA) Office of Advocacy a copy of the certification statement.

MSHA will also mail a copy of the final rule, including the preamble and regulatory flexibility certification statement, to mine operators and miners' representatives.

Factual basis for certification

MSHA explains below the Agency's quantitative approach in reaching its conclusion on the impact of statutory provisions, as implemented by the rule. The Agency performed its analysis separately for two groups of mines: coal mines and metal/nonmetal mines.

Under the SBREFA amendments to the RFA, MSHA must use the SBA definition for a small mine of 500 employees or fewer or, after consultation with the SBA Office of Advocacy, establish an alternative definition for the mining industry by publishing that definition in the Federal Register for notice and comment. The alternative definition could be the Agency's traditional definition of "fewer than 20 miners," or some other definition. As reflected in the certification, MSHA analyzed the costs of this final rule for small and large mines using both the traditional Agency definition, and SBA's definition, as required by RFA. The Agency compared the costs of the final rule for small mines in each sector to the revenues for each sector for every size category analyzed. In each case, the results indicated that the costs as a percent of revenue are less than 1 percent.

The following table summarizes the results of this analysis.

Mines: Costs Compared to Revenues

Number
of Mines
Estimated
Cost of
Final rule
Estimated
Revenue
(millions)
Estimated
cost per
mine
Cost as %
of
revenue
COAL MINES
Small <20
Large >=20

Small <20
Large >=20

All Mines

1617
1044

2650
11

2661

$1,149,957
$742,459

$1,884,593
$7,823

$1,892,416

$836
$18,672

$18,689
$819

$19,508

$711
$711

$711
$711

$711

0.14%
0.004%

0.01%
0.001%

0.01%
M/NM MINES
Small <20
Large >=20

Small <20
Large >=20

All Mines

9238
1543

10751
29

10780

$584,462
$97,558

$680,185
$1,835

$682,020

$11,929
$26,071

$32,134
$5,866

$38,000

$63
$63

$63
$63

$63

0.005%
0.000%

0.002%
0.000%

0.002%

In determining revenues for coal mines, MSHA multiplied coal production data (in tons) for mines in specific size categories (reported to MSHA quarterly) by the average price per ton for coal as determined in the Coal Industry Annual 1996. (Published by the Department of Energy's Energy Information Administration.) MSHA obtained revenue data for metal and nonmetal mines from the Mineral Commodities Summaries 1996. (Published by the U.S. Department of the Interior.)

Impact on Small Entities

MSHA estimates that small metal and nonmetal mines would incur an average annual cost increase of about $682,020 or $63 per small metal/nonmetal mine. For small coal mines, the incremental annual cost would be approximately $1.892 million or about $711 per small coal mine.

The Federal Mine Safety and Health Act of 1977 (Mine Act) provides that MSHA take into consideration the unique characteristics of small businesses; specifically it includes criteria to be used in proposing penalty assessments. One of the criteria is the size of the mine. MSHA takes the size of a mine into consideration when determining a regular or special assessment. Further, in accordance with Mine Act criteria, MSHA takes into consideration the ability of the mine operator to continue in business. MSHA's experience reveals that smaller mines generally are relatively less capitalized than large mines. Regulatory alternatives

MSHA has not exempted small mine operators from any provision of the rule. The Debt Collection Improvement Act (DCIA) requires civil penalties to be increased for all entities subject to civil penalties.

The incremental impact of the rule results in a cost increase which is less than 1 percent of the value of mine production for small metal/nonmetal mines and for small coal mines. The DCIA applies to all entities subject to assessment of civil penalties and mandates that MSHA increase civil penalties.

Paperwork impact

In accordance with the Regulatory Flexibility Act and the Paperwork Reduction Act of 1995 (PRA 95), MSHA has analyzed the paperwork burden for small mines. There are no paperwork requirements for this final rule.

Legal Basis for Final Rule

This final rule is being issued by MSHA to implement the requirements of the DCIA as they pertain to MSHA. This rule is published under the general authority of section 508 of the Mine Act and section 4 of the Federal Civil Penalties Inflation Adjustment Act of 1990, 28 U.S.C. section 2461 as amended by the DCIA.

Potential Conflicts with other Federal rules

The final rule affects all MSHA's existing standards for computation of civil penalties. It does not conflict with rules of other Federal agencies as only MSHA regulates the safety and health of miners on the federal level.

Executive Order 13045: Protection of Children from Environmental Health Risks and Safety Risks

In accordance with Executive Order 13045, MSHA has evaluated the environmental health or safety effects of the rule on children. The Agency has determined that the proposal will have no effects on children.

UNFUNDED MANDATES REFORM ACT OF 1995

MSHA has determined that, for purposes of § 202 of the Unfunded Mandates Reform Act of 1995, this final rule does not include any Federal mandate that may result in increased expenditures by State, local, or tribal governments in the aggregate of more than $100 million, or increased expenditures by the private sector of more than $100 million. Moreover, the Agency has determined that for purposes of § 203 of that Act, this final rule does not significantly or uniquely affect these entities.

Background

The Unfunded Mandates Reform Act was enacted in 1995. While much of the Act is designed to assist the Congress in determining whether its actions will impose costly new mandates on State, local, and tribal governments, the Act also includes requirements to assist Federal agencies to make this same determination with respect to regulatory actions.

Analysis

Based on the analysis in the Agency's Final Regulatory Impact Statement, the cost of this final rule is estimated to be about $2.6 million. Accordingly, there is no need for further analysis under § 202 of the Unfunded Mandates Reform Act.

MSHA has concluded that small governmental entities are not significantly or uniquely impacted by the final rule. The final rule will impact about 10,800 metal and nonmetal mining operations of which about 350 sand and gravel or crushed stone operations are run by state, local, or tribal governments for the construction and repair of highways and roads. Of these entities, only those which are assessed a civil penalty will incur additional costs related to this final rule. These costs, however, would be minimal. Notwithstanding this conclusion, MSHA will mail a copy of the final rule to these 350 entities.

PAPERWORK REDUCTION ACT of 1995

This regulation contains no information collection requirements.

SMALL BUSINESS REGULATORY ENFORCEMENT FAIRNESS ACT

MSHA estimates that the provisions of the Mine Safety and Health Act and the Civil Penalties Inflation Adjustment Act (as amended), as implemented by this rule could increase annual costs to the mining industry by about $2.6 million. The Agency anticipates that no major increase in costs or prices would result from the final rule. The rule does not meet the requirements for a major rule.

In addition, MSHA estimates that no adverse effects would result. Because of the small cost involved, competition, employment, productivity, foreign competitiveness, and business innovation on the part of the U.S. mining industry would be unaffected.